M GULAMALI ABDULHUSSEIN AND CO Vs. VISHWAMBHARLAL RUIYA

JUDGEMENT

(1.) This is an appeal from a judgment of Mr. Justice Bhagwati on a petition filed under the Indian Arbitration Act, holding that the petition was maintainable and adjourning it to Court for being disposed of on the merits. A few facts leading up to this petition may be stated. The petitioners case was that on January 30, 1948, the respondents gave oral instructions for the purchase of 500 bars of silver. On February 4 the petitioners sent a contract to be signed by the respondents. The contract was delivered to the respondents and according to the petitioners an acknowledgment was obtained in the petitioners peon book by an employee of the respondents. On February IS the petitioners sent a statement of account to the respondents. The respondents refused to accept the statement of account and in the correspondence that followed the respondents denied that there was any contract between the petitioners and the respondents. The petitioners filed this petition for a declaration that there was a valid contract between the petitioners and the respondents, and as the contract contained an arbitration agreement, all disputes in connection with the contract were bound to be referred to arbitration.

(2.) Now, the first contention urged by the respondents was that the petition was misconceived inasmuch as in para 10 of the petition the petitioners expressly averred that the petition was filed under Section 33 and the relief that they sought was under that section, and the contention put forward was that this petition did not lie under the express provisions of Section 33 of the Indian Arbitration Act. Section 33 of the Arbitration Act enables a party to challenge the existence or validity of an arbitration agreement, and what is urged is that this is not a petition challenging the existence of an arbitration agreement, but it is a petition seeking to affirm the existence of an arbitration agreement. According to Mr. Maneksha, who appears for the respondents, it is only when a party wants to challenge an arbitration agreement that he can come to Court for the necessary relief, but when he wishes to affirm the existence of an arbitration agreement, it is not open to him to take out a petition under the Indian Arbitration Act. It is important to note that under Section 32 of the Indian Arbitration Act, all suits are barred with regard to the existence, effect or validity of an arbitration agreement, and Mr. Maneksha concedes that it would not be open to the petitioners to file a declaratory suit for a declaration that there is in existence an arbitration agreement. If such a suit was filed, the petitioners would be met with Section 32. Therefore, according to Mr. Maneksha, the petitioners cannot get any relief at all in any Court of law. It is true that they could file a substantive suit on their cause of action, viz. on the contract on which they rely in this petition. But their right to have the matters determined by arbitration would not receive proper recognition or relief from any Court of law, because in this case as the factum of the contract is denied the arbitrators have no jurisdiction to determine that question. It is only when the Court has determined that question in favour of the petitioners and has held that there was a contract that the arbitrators would have jurisdiction to proceed with the reference. Now, a Court of law would hesitate considerably before coming to the conclusion that a party has an undoubted right, and yet the Legislature has provided no relief in respect of that right. It is important to note that in England a declaratory suit with regard to an arbitration agreement would lie. In India, whatever the position was prior to the passing of the present Arbitration Act, it is clear that now such a suit would be barred under Section 32.

(3.) Mr. Maneksha argues that inasmuch as Section 33 expressly provides for an application for challenging an arbitration agreement and there is no provision for affirming or asserting an arbitration agreement, the Legislature has taken away such a right front a person who wishes to proceed with the arbitration on the strength of an arbitration agreement. Mr. Maneksha says that at best there may be a lacuna in the Act and it is not for a Court of law to make good such a lacuna. It is perfectly clear that when the Legislature enacted Section 32 and barred all suits with regard to the existence, effect or validity of an arbitration agreement, the object of the Legislature was that all questions with regard to these matters should be dealt with under the Arbitration Act and not by substantive suits. That object is perfectly clear and patent from the terms of Section 32. It is therefore difficult to believe that having taken away the right of a party to proceed with a substantive suit, the Legislature also took away the right of a party to have the existence or the validity of an agreement determined by an application under the Arbitration Act. Mr. Maneksha is right that Section 33 would be superfluous or overlapping if the construction was put upon Section 82 that all questions with regard to the existence, effect or validity of an arbitration agreement have to be determined by applications under the Arbitration Act and not by civil suits, and that the right to make those applications is implicit in the very terms of Section 32 itself. But it may be that for greater caution the Legislature has dealt with a particular kind of application which is mentioned in Section 33. It does not therefore follow that because a particular kind of application is mentioned in Section 33, therefore the Legislature has not provided in the Act itself for all kinds of applications that may be made under that Act and has taken away the right with regard to the making of the applications other than the specific application referred to in. Section 83 of the Act. In my opinion, therefore, it is open to a party to make any application with regard to which a suit in barred under Section 32. Section 33 is merely one instance of such an application. The Legislature cannot conceivably deal with all possible applications that may arise with regard to which suits are barred under Section 32.